UAE Depreciation Rates: Chart by Asset Class and How to Apply Them
Why Depreciation Matters for UAE Corporate Tax
Depreciation is the process of spreading the cost of a fixed asset over its useful life. For corporate tax purposes, depreciation reduces your taxable income — the more you can legitimately depreciate, the less tax you pay.
With the introduction of UAE corporate tax at 9%, depreciation has become a meaningful tax planning tool. A company that buys AED 500,000 worth of equipment does not deduct AED 500,000 in year one (in most cases). Instead, the cost is spread over the asset's useful life, creating a deduction in each year.
Straight-Line Depreciation
The most common method. The cost of the asset is divided equally over its useful life.
Formula: Annual depreciation = (Cost - Residual value) / Useful life
Example
Asset: Office furniture costing AED 50,000. Useful life: 5 years. Residual value: AED 5,000. Annual depreciation: (50,000 - 5,000) / 5 = AED 9,000 per year.This means AED 9,000 is deductible from your taxable income each year for 5 years. At the 9% corporate tax rate, that saves AED 810 in tax annually.
Straight-line is simple, predictable, and universally accepted for UAE tax purposes.
Declining Balance Depreciation
An accelerated method where higher depreciation is charged in the early years and lower amounts in later years.
Formula: Annual depreciation = Book value at start of year x Depreciation rate
Example
Asset: Computer equipment costing AED 100,000. Rate: 40% declining balance. Year 1: AED 100,000 x 40% = AED 40,000 Year 2: AED 60,000 x 40% = AED 24,000 Year 3: AED 36,000 x 40% = AED 14,400This method front-loads the deduction, which can be advantageous for tax planning — you get larger tax savings in the early years when cash flow is often tightest.
UAE Depreciation Rate Chart by Asset Class
There is no statutory depreciation rate table in the UAE. Unlike jurisdictions that publish fixed percentages in tax law, UAE corporate tax follows the accounting treatment under IFRS: you choose a useful life that reflects how long the asset will actually be used, and the rate follows from it. Anyone presenting a UAE "official depreciation rate chart" is presenting convention, not law.
That said, conventions exist and auditors expect them. Under the straight-line method the annual rate is simply 100% ÷ useful life, which gives the following commonly applied figures:
| Asset class | Typical useful life | Straight-line rate |
|---|---|---|
| Computer equipment, laptops | 3–5 years | 20%–33.3% |
| Software | 3–5 years | 20%–33.3% |
| Mobile phones and small IT | 2–3 years | 33.3%–50% |
| Vehicles | 4–5 years | 20%–25% |
| Office furniture and fittings | 5–10 years | 10%–20% |
| Office equipment | 5 years | 20% |
| Machinery and plant | 5–15 years | 6.7%–20% |
| Leasehold improvements / fit-out | Lease term (or 5–10 years) | Over the lease |
| Buildings | 25–50 years | 2%–4% |
Worked example. A laptop costing AED 6,000 with a 3-year useful life and no residual value depreciates at 33.3% — AED 2,000 per year, or AED 166.67 per month. Office furniture costing AED 30,000 over 8 years depreciates at 12.5% — AED 3,750 per year.
Two rules that decide whether the rate you pick survives review: it must reflect actual expected use, and it must be applied consistently. An auditor will challenge a 3-year life on office furniture or a 10-year life on a laptop, and switching useful lives between years to manage taxable profit is exactly what a reviewer looks for. Land is never depreciated.
How Depreciation Reduces Corporate Tax
Let us work through a concrete example for a free zone company:
Scenario: Your company earns AED 1,000,000 in revenue with AED 600,000 in operating expenses (before depreciation). You purchased AED 200,000 in equipment during the year with an average useful life of 5 years.
Without depreciation deduction: Taxable income: AED 1,000,000 - AED 600,000 = AED 400,000 Tax (9% on amount above AED 375,000): 9% x AED 25,000 = AED 2,250
With depreciation deduction (straight-line): Depreciation: AED 200,000 / 5 = AED 40,000 Taxable income: AED 1,000,000 - AED 600,000 - AED 40,000 = AED 360,000 Tax: AED 0 (below AED 375,000 threshold)
In this example, proper depreciation accounting saves AED 2,250 in tax. Over 5 years, the total depreciation deduction of AED 200,000 saves approximately AED 18,000 in corporate tax.
Tracking Depreciation in Practice
Every fixed asset should be recorded in an asset register that tracks:
- Asset description and category
- Purchase date and cost
- Depreciation method and rate
- Monthly/annual depreciation amount
- Accumulated depreciation
- Net book value
Maya Finance includes a fixed assets module that handles this automatically. When you categorize a purchase as a fixed asset, the system creates the asset register entry, applies the appropriate depreciation method, and posts monthly depreciation journal entries to your books. At year-end, the depreciation schedule is ready for your tax filing.
Frequently asked questions
What is the depreciation rate in the UAE?
There is no statutory depreciation rate in the UAE. UAE corporate tax follows the accounting treatment under IFRS, so the rate is derived from the useful life you assign to the asset: under the straight-line method it is 100% divided by the useful life. In practice that means roughly 20%–33.3% for computer equipment (3–5 years), 20%–25% for vehicles (4–5 years), 10%–20% for office furniture and fittings (5–10 years) and 2%–4% for buildings (25–50 years). The figure has to reflect genuine expected use, because that is what an auditor tests.
Is there an official UAE depreciation rate chart?
No. Some jurisdictions publish fixed percentages in tax legislation; the UAE does not. Federal Decree-Law No. 47 of 2022 taxes accounting profit subject to adjustments, and depreciation is taken from the financial statements prepared under IFRS. Any chart you find — including the one on this page — describes convention and common practice, not a legal schedule. Where a rate is challenged, the defence is that the useful life reflects how the asset is actually used and has been applied consistently.
What is the depreciation rate for a laptop or computer equipment?
Computer equipment is commonly depreciated over 3 to 5 years, which is a straight-line rate of 20% to 33.3%. Laptops and mobile devices usually sit at the shorter end because they are replaced faster: a 3-year life gives 33.3%, so an AED 6,000 laptop depreciates by AED 2,000 a year. If your business genuinely replaces hardware every two years, a 2-year life is defensible provided you apply it consistently rather than selectively.
What is the depreciation rate for furniture and fittings?
Office furniture and fittings are typically given a 5 to 10 year useful life, a straight-line rate of 10% to 20%. Leasehold improvements and fit-out are treated differently: they are usually written off over the lease term rather than a standard asset life, because the benefit ends when the lease does.
Can I use declining balance depreciation for UAE corporate tax?
Yes. UAE corporate tax follows the accounting treatment, and IFRS permits straight-line, declining balance and units-of-production methods where they reflect the pattern in which the asset's economic benefits are consumed. Declining balance front-loads the deduction, which suits assets that lose value fastest early on. What matters is that the method is appropriate to the asset and applied consistently — not that it produces the lowest tax in a given year.
Does depreciation reduce UAE corporate tax?
Yes, indirectly. Corporate tax is charged on accounting profit subject to adjustments, and depreciation is an expense in that profit — so it reduces the taxable base. It is not a cash cost, which is why depreciation policy affects tax without affecting the bank balance. For a Qualifying Free Zone Person paying 0% on qualifying income the effect is limited, but it still matters for non-qualifying income and for the de minimis calculation.